Business Corruption in China’s Economic Reform and Its Institutional Roots

During the past 20 years, China’s economic reform has achieved great success. The building of the market economy stirred up people’s enthusiasm for production and made economic organizations more active and efficient. As a result, the national economy boomed and the living standard rose quickly. But, at the same time, there also emerged all types of business corruption in China. These corrupt practices indicate that a great part of the private income produced by economic efforts is not obtained by the creation of the nation’s wealth, but by the infringement of the rights and interests of certain people, “hindering personal economic efforts from becoming activities with a private rate of return close to the social rate of return.” These kinds of corruption are not only producing social injustice, but also thwarting sustained economic growth in China and threatening the strategic implementation of the country’s modernization.